First Thing Today | December 14, 2023

Good morning!

Corn and wheat firmer, beans choppy overnight... Corn and wheat futures posted mild corrective gains throughout the overnight, while soybeans traded on both sides of unchanged. As of 6:30 a.m. CT, corn futures are trading 2 to 3 cents higher, soybeans are 2 cents lower to a penny higher, SRW wheat futures are 6 to 7 cents higher, HRW wheat is 3 to 4 cents higher and HRS wheat is mostly 7 cents higher. Front-month crude oil futures are around $1.25 higher and the U.S. dollar index is more than 500 points lower this morning.

Fed pivot entices strong market reactions... Markets cheered the Fed’s dovish pivot on Wednesday, signaling much improved risk appetite. The U.S. stock indexes surged, gold prices soared back above $2,000, the U.S. dollar index plunged to the lowest level since Aug. 10 and Treasury yields declined, with the benchmark 10-year note yield dropping below 4%.

Weekly Export Sales Report out this morning... For the week ended Dec. 7, traders expect:

Philippines extends lower tariffs for corn, rice and pork imports... The Philippine government approved an extension of lower tariff rates on rice, pork and corn imports as the country battles inflation. The modified rates for most favored nations, approved in 2021, were due to expire at the end of this year.

Indonesia seeks military help to plant rice... Indonesia ordered the military to help farmers plant rice as severe drought has reduced output, lifting prices, requiring increased imports and threatening food security. With planting behind schedule due to dryness fueled by the El Niño weather phenomenon, President Joko Widodo requested military supervisory officers in villages to help take advantage of recent rains and immediately plant rice.

UK wheat production drops 10%... Wheat production in the United Kingdom totaled 13.98 MMT this year, according to the ag ministry, down 10% from last year. Planted area declined 4.9% and yields fell 5.4%.

China tries to boost slumping housing market... Beijing and Shanghai relaxed home purchase restrictions, including lowering the minimum deposit ratio for first and second homes, suggesting renewed efforts by Chinese authorities to revive the sluggish housing market. Beijing authorities said they would lower the minimum deposit ratio for first homes to 30% from 35% to 40% previously. The minimum deposit ratio for second homes will be lowered to 50% in the six urban districts and 40% for the non-urban districts from 60% to 80% previously. Shanghai lowered the minimum deposit ratio for first homes to 30% from 35% previously. The minimum deposit ratio for second homes in Shanghai will be lowered to 40% to 50% from 50% to 70% previously.

BOE doesn’t follow Fed’s dovish shift... The Bank of England (BOE) kept interest rates at a 15-year high of 5.25%. There was no discussion of cutting interest rates and BOE remains concerned inflation in Britain will continue to be stickier than in the U.S. and euro zone, noting rates needed to stay high for “an extended period.” Although the near-term outlook for inflation was likely to be slightly lower than BOE expected last month, policymakers’ longer-term concerns remained.

IEA boosts 2024 world oil demand forecast... The International Energy Agency (IEA) revised its forecast for world oil consumption in 2024, anticipating a rise of 1.1 million barrels per day (bpd), an increase of 130,000 bpd from its previous projection. IEA cited a “somewhat improved” global GDP outlook, especially in the U.S., where a more stable economic trajectory is emerging, as a contributing factor to the updated forecast. Additionally, the decline in oil prices is expected to further stimulate oil consumption. For this year, IEA predicts oil demand growth of 2.3 million bpd, a reduction of 90,000 bpd compared to its previous estimate. This adjustment is mainly due to a nearly 400,000 bpd reduction in IEA’s fourth-quarter expectation.

Slow developing cash cattle market... So far, only a small amount of cash cattle have traded around $1.00 in the northern market, though volume wasn’t enough for a true gauge of this week’s market. If cattle futures face pressure the remainder of the week, cash prices are likely to trend lower again. But strength in futures could be enough to entice steady to possibly firmer bids from packers.

Cash hog index ticks up... The CME lean hog index firmed 43 cents to $68.13, the first daily increase since Nov. 8. It’s going to take more than one daily uptick in the index to signal a seasonal low is in place, though December hogs, which expire today, finished Wednesday at a 20.5-cent premium. That suggests traders sense a little more near-term strength before the contract settles on Dec. 18. However, February futures ended yesterday at a $1.405 discount to today’s index.

Overnight demand news... Japan purchased 102,493 MT of milling wheat in its weekly tender, including 68,345 MT U.S. and 34,148 MT Canadian. Saudi Arabia tendered to buy 715,000 MT of optional origin milling wheat.

See ‘Policy Updates’ for late-breaking morning news updates... For updates to items in “First Thing Today” or any late-breaking morning news stories, check “Policy Updates” on www.profarmer.com.

Today’s reports

• 7:30 a.m. Weekly Export Sales — FAS
• 2:00 p.m. Livestock, Dairy, and Poultry Outlook: December 2023 — ERS
• 2:00 p.m. Sugar and Sweeteners Outlook: December 2023 — ERS
• 2:00 p.m. Vegetable and Pulses Outlook: December 2023 — ERS
• 2:00 p.m. Organics — NASS